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Asian Rally Fizzles Out, Japan Ends Weaker

CNBC.com with Wires
Tuesday, 26 Feb 2008 | 5:41 AM ET

Asian stocks pulled back from an early rally to close broadly higher Tuesday. Japan ended weaker and South Korea closed flat. But Australia managed to hang on to its advance to finish in positive territory.

Japanese stocks gave up early gains and closed lower, dragged into the red by mobile carrier KDDI Corp on a ratings downgrade. The Nikkei 225 Average fell 0.65 percent, after jumping more than 3 percent and posting a six-week closing high on Monday. But property shares climbed, with Mitsubishi Estate up more than 4 percent after Daiwa Institute of Research hiked its rating to "1" from "3," citing the company's new midterm plan, which it termed "positive".

South Korea's KOSPI finished flat after hitting a five-week high, as Samsung Securities slid on a planned probe by prosecutors as part of an ongoing investigation into Samsung Group, while exporters retreated amid persistent concerns about a U.S. recession. Samsung Electronics, the world's top memory chipmaker, fell 1.72 percent.

A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.
Ian Waldie | Bloomberg | Getty Images
A man uses his mobile phone in front of electronic stock boards at the Australian Securities Exchange (ASX Ltd.) headquarters in Sydney, Australia.

Australian shares ended 0.8 percent higher, with financial firms extending gains as worries over credit markets eased, while retailer Woolworths gained on unexpectedly strong results. But shares in ABC Learning Centres plunged as much as 69 percent on concerns over its debt obligations, while QBE Insurance Group shares fell the most in over six years after it posted earnings that missed market forecasts.

Hong Kong blue chips closed 1.9 percent higher as HSBC Holdings jumped after Standard & Poor's removed a threat to downgrade the ratings of U.S. bond insurers, easing concerns about subprime-related losses at the biggest banks. Steel plays gained further momentum after China's largest steelmaker, Baosteel, said it would raise major steel product prices by up to 20 percent. Angang Steel led the resource stocks in heavy trade to rally more than 7 percent at one point. Maanshan Iron & Steel also advanced.

Singapore's Straits Times Index pulled back from ealier gains to close 0.4 percent higher. Shares of Noble Group rose as much as 7.7 percent on hopes the company will post strong fourth-quarter earnings later in the session. But shares of Chinese-based Synear Food fell over 28 percent after the firm posted lower-than-expected fourth-quarter earnings.

The Shanghai Composite Index closed 1.1 percent higher after the China Securities Regulatory Commission addressed a key worry of investors, the balance between supply and demand for fresh equity, by warning companies against making big issues of new shares. That appears likely to ensure a drastic scaling back or postponement of huge share offersplanned by companies including Ping An Insurance.